Kinder Morgan earnings up 17%

Pipeline company expects to exceed 2004 forecast

By

StephanieI. Cohen

WASHINGTON (CBS.MW) -- Natural gas and pipeline operator Kinder Morgan reported a 17 percent jump in third-quarter earnings Wednesday and raised its forecast for the year based on gains from an investment partnership.

The Houston-based energy company also said it expects to exceed "by a couple of cents" a share its earlier forecast for earnings of $3.71 per diluted share for 2004.

Third-quarter earnings were driven by investments in Kinder Morgan Energy Partners
KMP, -1.72%
and strong performances by subsidiaries Natural Gas Pipeline Company of America and TransColorado, according to the company.

Kinder Morgan
KMI, -1.66%
operator more than 35,000 miles of natural gas and products pipelines and 120 terminals in the United States, owns the general partner of Kinder Morgan Energy Partners.

Investments in the partnership contributed $122.1 million of pretax earnings in the third quarter, up 22 percent from $100.3 million in the same period last year.

Kinder Morgan will receive $127.3 million in total distributions from its investment in Kinder Morgan Energy Partners for the quarter, up from $106.7 million for the third quarter of 2003.

The company posted a net income of $111.9 million, or 90 cents per share, compared with $95.6 million or 77 cents a share for the same period a year ago.

Analysts polled by Thomson First Call had expected earnings of 88 cents a share.

The pipeline company said it has generated roughly $480 million of cash flow for 2004 through September, and expects to exceed its 2004 budget of approximately $578 million of cash flow.

The company is also on track to return $2 billion to investors by the end of 2004.

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